258 THE BiG DROP
29) Should investors consider buying Treasury Inflation
Protected Securities (TIPS)?
They have a place. They’re a kind of cash equivalent with
an inflation insurance policy inside. They are also very liquid.
They give you liquidity and safety, which is good in deflation,
but they have an inflation protection built in too. In the short-
term, TIPS are actually one instrument that covers both sides
of a barbell strategy.
In Strategic Intelligence, we’ve recommended ten-year
notes, which are on the deflation side of the barbell, and some
gold, which is the inflation side. But short-term TIPS are right
there in the middle and might be worth considering.30) What’s the difference between Austrian Economics
and Complexity Theory?
They have a lot in common. Complexity theory is a branch
of science that only emerged in the 1960s. It’s a relatively new
science. It’s come a long way in 50 years, but as the history
of science goes, complexity theory is relatively new and a lot
of that has to do with computers. When you want to actu-
ally solve complexity problems, you need massive computing
power and that didn’t exist prior to the 1960s.
The main Austrians, going back to Carl Menger, Ludwig
Von Mises and Friedrich Hayek, were doing their work in the
late 19th and 20th centuries. That’s why there’s little overlap
with them.
What Hayek said, however, was exactly what complexity
theory says. Essentially, central planning will always fail. This
is what he said in The Road to Serfdom, and what he said in one
of his very influential articles.
Hayek said that nobody is smart enough or has enough
information to plan an economy, no matter how much power
they have. At the time, he was thinking the Soviet Union.
That’s exactly what a complexity theorist would say, too.